Which of the Following Is Generally True About the Sufficiency

question 8

Multiple Choice

Which of the following is generally true about the sufficiency of audit evidence?

• A)The amount of evidence that is sufficient varies inversely with the acceptable risk of material misstatement.
• B)The amount of evidence concerning a particular account varies inversely with the materiality of the account.
• C)The amount of evidence concerning a particular account varies inversely with the inherent risk of the account.
• D)When evidence is appropriate with respect to an account it is also sufficient.

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Definitions:

Compounded Annually

The process of earning interest on both the initial principal and the accumulated interest from previous periods, calculated once a year.

Annuity Growth Rate

The annual rate at which the value of an annuity investment increases, often fixed or variable depending on the annuity contract.

Cash Flow Growth Rate

The rate at which a company's cash flow increases or decreases over a specific period.

Required Rate

The minimum rate of return that an investor expects or requires from an investment to make it worthwhile.